Solution to all economic problems = give free money to people (it's good enough for the banksters..)

I know my crackpot ideas are unlikely to achieve much beyond a few subscribers to my newsletter, but increasingly I become convinced that the solution to all economic problems is "give free money to people."

We give lots of free money to people, actually. We just tend to give it to banksters. I saw some panicked stuff today about ZOMG THE FED BALANCE SHEET IS $3 TRILLION or something similar, which essentially means the Fed has created 3 trillion bucks out of nothing and purchased financial assets with it. That isn't precisely a gift, but it boosts asset prices, and most of us don't own many financial assets. Rich people do.

So Fed action of this type benefits the wealthy, with the vague hope it improves the broader macroeconomy.

Unless gastritis broke my calculator, 3 trillion fedbucks translates to about 10 grand in free money for each of us.

I think I advocated the "mail every SS # holder a 10 grand check" at some point. Would be happy to hear from the Very Serious People why this would be worse policy. It's impossible to imagine it wouldn't be welfare enhancing. Tell me why if I'm wrong.

3. The only trickle down is warm, yellow and smells funny.

2. Democratize money creation

No monopoly for few corporate persons. All citizens of a money creation system should be equal. Simplest form would be money creation as citizen salary. Taxation, nullification etc. methods can be used to maintain purchasing power, preventing inflation and accumulation of money in hands of few. There are more detailed system thought about and being developed, we can build quantum computers, developing well functioning monetary system is easy compared to that.

6. Here is the difference

It is fairly simple. In exchange for $3 trillion in new bucks, $3 trillion in troubled assets were removed. (actually it was more than that, but the 1:1 ratio "face value" exchange was maintained). "Real" money was exchanged for what had become "funny" money.

In your plan, there would be no 1:1, it would be just opening the spigot. Now, no doubt, I would love to receive a check for $10,000. However if everyone got one, it would be inflationary. Why? Because unlike the bankers who unfortunately have largely sat on the money, we would start spending it immediately.

The US economy is about a $14 to $15 trillion a year operation. Now if you suddenly kick that up to a $17 to $18 trillion a year operation it would be a big deal. It would also be a big deal the next year, when you stopped pumping money in. It is just too large a jolt to the system IMHO.

The idea has merit, but I think it would need to be moderated a bit to spread the impact over a number of years

7. It is not too far fetched. I'm payed $20 a day to stay out of jail.

+$10 a day to pay Medicare expenses. If I go to jail I lose the Social Security and Medicare. In jail I will cost tax payers $200 a day. With our prison expenses we could save money by paying everybody $20 a day to stay out of prison.

12. That's interesting. I've never heard of that. It certainly seems smarter than locking people

8. The Republican Party

has been working for decades to perfect their "blame-the-poor" arguments.

Krugman:

From Welfare Queens to Disabled Deadbeats

If you want to understand the trouble Republicans are in, one good place to start is with the obsession the right has lately developed with the rising disability rolls. The growing number of Americans receiving disability payments has, for many on the right, become a symbol of our economic and moral decay; we’re becoming a nation of malingerers.

<...>

I mean, when Reagan ranted about welfare queens driving Cadillacs, he was inventing a fake problem — but his rant resonated with angry white voters, who understood perfectly well who Reagan was targeting. But Americans on disability as moochers? That isn’t, as far as I can tell, an especially nonwhite group — and it’s a group that is surely as likely to elicit sympathy as disdain. There’s just no way it can serve the kind of political purpose the old welfare-kicking rhetoric used to perform.

The same goes, more broadly, for the whole nation of takers thing. First of all, a lot of the “taking” involves Social Security and Medicare. And even the growth in means-tested programs is largely accounted for by the Earned Income Tax Credit — which requires and rewards work — and the expansion of Medicaid/CHIP to cover more children. Again, not the greatest of political targets.

The point, I think, is that right-wing intellectuals and politicians live in a bubble in which denunciations of those bums on disability and those greedy children getting free health care are greeted with shouts of approval — but now have to deal with a country where the same remarks come across as greedy and heartless (because they are).

Today, however, Brazil’s level of economic inequality is dropping at a faster rate than that of almost any other country. Between 2003 and 2009, the income of poor Brazilians has grown seven times as much as the income of rich Brazilians. Poverty has fallen during that time from 22 percent of the population to 7 percent.

Contrast this with the United States, where from 1980 to 2005, more than four-fifths of the increase in Americans’ income went to the top 1 percent of earners. (see this great series in Slate by Timothy Noah on American inequality) Productivity among low and middle-income American workers increased, but their incomes did not. If current trends continue, the United States may soon be more unequal than Brazil.

Several factors contribute to Brazil’s astounding feat. But a major part of Brazil’s achievement is due to a single social program that is now transforming how countries all over the world help their poor.

The program, called Bolsa Familia (Family Grant) in Brazil, goes by different names in different places. In Mexico, where it first began on a national scale and has been equally successful at reducing poverty, it is Oportunidades. The generic term for the program is conditional cash transfers. The idea is to give regular payments to poor families, in the form of cash or electronic transfers into their bank accounts, if they meet certain requirements. The requirements vary, but many countries employ those used by Mexico: families must keep their children in school and go for regular medical checkups, and mom must attend workshops on subjects like nutrition or disease prevention. The payments almost always go to women, as they are the most likely to spend the money on their families. The elegant idea behind conditional cash transfers is to combat poverty today while breaking the cycle of poverty for tomorrow.

15. If we give money to the poor, it ultimately helps the wealthy too

It also helps a great many people--and the economy at large--along the way.

If we give money to the wealthy, it helps the wealthy and no one else.

During the collapse of the housing bubble, rather than injecting cash directly into the banks, I proposed that the money instead be given to the borrowers by paying of a big chunk of their delinquent mortgages; this would have the effect of relieving some (most? all?) of their debt while also getting money to the banks, though perhaps not as quickly as one big, fat multi-billion dollar check.

Instead, the banks got to benefit twice (cash infusion from the Fed, and they still held the mortgages) while the homeowners got screwed. Again.

16. It may be our greatest tool in battling climate change.

People need at least the bare essentials. If they can be provided with those in exchange for not being a sore on the environment, the cost would be small in the long run and the possible extra bonus of having trees would appeal to our great grandchildren.

18. Actually ... That's kind'a whats happening

Most if the Feds 3 trillion dollars in assets are US government securities (1.7 trillion) and mortgage backed securities (1 trillion)

The Fed is buying older US government securities from banks and brokers so that said banks and brokers will have available funds to buy the new issued US government securities. So the feds printing presses arent supporting the banks but the Treasury and the deficit. Same wirh mortgage backed securities.

So ... If you work for the Federal govt, are in the military, work for a defense contractor, get federal assistance etc. then the feds created dollars are going to you. If you sold a house, bought a house, work im construction etc. the feds money printing supports you.